Sila Realty Trust, Inc. Completes $28.25 Million Acquisition of Fort Smith Inpatient Rehabilitation Facility

Rhea-AI Summary

Sila Realty Trust (NYSE: SILA), a net lease REIT focused on the healthcare sector, has acquired an inpatient rehabilitation facility in Fort Smith, Arkansas for $28.25 million. The 50-bed facility, built in 2021, spans approximately 62,500 square feet and is fully leased to Mercy Rehabilitation Hospital, a joint venture between Mercy Hospital Fort Smith and Lifepoint Health. This acquisition is part of Sila's larger strategy, which has included purchasing eight Class A healthcare properties in 2024 for a total of about $164 million. The company aims to deliver long-term growth and value to investors by acquiring institutional-quality healthcare facilities operated by strong tenants.

Positive

• Acquisition of a modern, fully-leased 50-bed inpatient rehabilitation facility for $28.25 million
• Part of a larger acquisition strategy, with 8 Class A healthcare properties purchased in 2024 for $164 million
• Facility is operated by a joint venture of established healthcare providers
• Property demonstrates strong market performance, aligning with company's strategic objectives

Negative

• None.

Financial Analyst

Sila Realty Trust's $28.25 million acquisition of the Fort Smith Healthcare Facility marks a significant addition to their portfolio, aligning with their strategic focus on the healthcare sector. This move is part of a larger $164 million investment in eight Class A healthcare properties in 2024, demonstrating the REIT's commitment to growth and value creation.

The acquisition presents several positive factors:

• Strategic Fit: The inpatient rehabilitation facility aligns perfectly with Sila's focus on "significant, growing and resilient" healthcare assets.
• Quality Asset: Built in 2021, the 62,500 square foot facility is modern and likely requires minimal near-term capital expenditures.
• Strong Tenancy: The joint venture between Mercy Hospital Fort Smith and Lifepoint Health combines local expertise with national operational excellence, potentially reducing tenant risk.
• Market Position: The facility's "strong and dominant performance" suggests a solid market share, which could translate to stable occupancy and revenue.

However, investors should consider potential risks:

• Geographic Concentration: The focus on Fort Smith may increase exposure to local market fluctuations.
• Tenant Dependency: While the tenant appears strong, any issues with the joint venture could impact rental income.
• Healthcare Regulatory Risk: Changes in healthcare policies or reimbursement rates could affect the facility's profitability.

Overall, this acquisition appears to strengthen Sila Realty Trust's position in the healthcare REIT space, potentially enhancing long-term shareholder value through quality asset acquisition and tenant partnerships.

Healthcare Real Estate Expert

The acquisition of the Fort Smith Healthcare Facility by Sila Realty Trust is a strategic move that capitalizes on several key trends in healthcare real estate:

• Specialization: The focus on inpatient rehabilitation facilities (IRFs) is astute. IRFs are seeing increased demand due to an aging population and a shift towards value-based care models that prioritize outcomes and shorter hospital stays.
• New Construction: The 2021 build date ensures the facility meets current healthcare standards and patient expectations, potentially commanding premium rents and requiring less immediate capital investment.
• Operator Quality: The joint venture between Mercy Hospital and Lifepoint Health combines local market knowledge with national operational expertise, a blend that often leads to superior performance in healthcare facilities.

From a real estate perspective, the $28.25 million price tag for a 62,500 square foot facility translates to approximately $452 per square foot. This is within the expected range for a new, specialized healthcare facility in a secondary market like Fort Smith.

The 50-bed capacity is optimal for an IRF, balancing operational efficiency with personalized care. This size allows for economies of scale while maintaining the specialized attention required for rehabilitation patients.

Investors should note that the healthcare real estate market, particularly for specialized facilities like IRFs, has shown resilience even during economic downturns. This acquisition potentially provides Sila with a stable, long-term income stream, further diversifying their portfolio within the healthcare sector.

However, it's important to monitor the evolving landscape of healthcare delivery and reimbursement models, as these can significantly impact the long-term viability and profitability of such specialized facilities.

TAMPA, Fla.--(BUSINESS WIRE)-- Sila Realty Trust, Inc. (NYSE: SILA) (the “Company” or “we”), a net lease real estate investment trust (“REIT”) with a strategic focus on investing in the significant, growing, and resilient healthcare sector, today announced the $28.25 million acquisition of an inpatient rehabilitation facility located in Fort Smith, Arkansas (the “Fort Smith Healthcare Facility”).

The Fort Smith Healthcare Facility is a 50-bed, inpatient rehabilitation facility offering intense rehabilitation tailored to the individual needs of those recovering from stroke, brain injury, neurological conditions, trauma, spinal cord injury, amputation, and orthopedic injury. The approximately 62,500 square foot facility was built in 2021 and is fully leased to Mercy Rehabilitation Hospital, a joint venture between Mercy Hospital Fort Smith and Lifepoint Health.

“The Fort Smith Healthcare Facility’s operations combine the leading healthcare system in Fort Smith with a more than 100-year history and one of the nation’s leading inpatient rehabilitation facility operators,” stated Michael A. Seton, President and Chief Executive Officer of the Company. “We believe this state-of-the-art facility, which has demonstrated strong and dominant performance in the market, exemplifies our strategy of acquiring institutional quality healthcare facilities operated by strong and proven tenants. The acquisition of eight Class A healthcare properties in 2024, for an aggregate purchase price of approximately $164 million, supports our strategic objectives of delivering long-term growth, success and value creation to our investors and partners.”

About Mercy Hospital Fort Smith and Lifepoint Health

The 336-bed Mercy Hospital Fort Smith, an affiliate of Mercy Health of Missouri (“Mercy”), is located approximately 4.5 miles northwest of the Fort Smith Healthcare Facility. Mercy is a large integrated healthcare system headquartered in St. Louis, Missouri, with over 5,000 staffed beds throughout 30 acute care and critical access hospitals and 15 specialty care hospitals. The system spans across Missouri, Oklahoma, Arkansas and Kansas, with more than 2,400 physicians providing services in more than 800 physician practices and outpatient facilities. Lifepoint Health, headquartered in Brentwood, Tennessee, is a leading national healthcare provider with 60 community hospital campuses, more than 60 rehabilitation and behavioral health facilities, and more than 250 additional sites of service across 31 states.

About Sila Realty Trust, Inc.

Sila Realty Trust, Inc. is a net lease real estate investment trust headquartered in Tampa, Florida, with a strategic focus on investing in the significant, growing, and resilient healthcare sector of the U.S. economy. The Company invests in high quality healthcare facilities along the continuum of care, which, we believe, generate predictable, durable, and growing income streams. Our portfolio comprises high-quality tenants in geographically diverse facilities, which are positioned to capitalize on the dynamic delivery of healthcare to patients. As of July 29, 2024, the Company owned 138 real estate properties and two undeveloped land parcels located in 65 markets across the U.S. For more information, please visit the Company’s website at www.silarealtytrust.com.

Forward-Looking Statements

Certain statements contained herein, other than historical fact, may be considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provided by the same. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties. No forward-looking statement is intended to, nor shall it, serve as a guarantee of future performance. You can identify the forward-looking statements by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will” and other similar terms and phrases. Forward-looking statements are subject to various risks and uncertainties and factors that could cause actual results to differ materially from the Company's expectations, and you should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond the Company's control and could materially affect the Company's results of operations, financial condition, cash flows, performance or future achievements or events. Additional factors include those described under the section entitled Item 1A. "Risk Factors" of Part I of the Company's 2023 Annual Report on Form 10-K with the SEC, copies of which are available at www.sec.gov. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240729464814/en/

Investor Contact:

Miles Callahan, Senior Vice President of Capital Markets and Investor Relations

833-404-4107

IR@silarealtytrust.com

Source: Sila Realty Trust, Inc.

FAQ

What is the value of Sila Realty Trust's recent acquisition in Fort Smith, Arkansas?

Sila Realty Trust (NYSE: SILA) acquired the Fort Smith inpatient rehabilitation facility for $28.25 million.

How many beds does the newly acquired Fort Smith Healthcare Facility have?

The Fort Smith Healthcare Facility is a 50-bed inpatient rehabilitation facility.

Who is the tenant of the Fort Smith Healthcare Facility acquired by Sila Realty Trust?

The facility is fully leased to Mercy Rehabilitation Hospital, a joint venture between Mercy Hospital Fort Smith and Lifepoint Health.

How many healthcare properties has Sila Realty Trust (SILA) acquired in 2024?

Sila Realty Trust has acquired eight Class A healthcare properties in 2024 for an aggregate purchase price of approximately $164 million.